Madras High Court
R.Venkatesan @ Venkatesh vs Jitesh Kumar Jain on 27 September, 2024
Author: R.Subramanian
Bench: R.Subramanian
AS.No.189 of 2024
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 27.09.2024
(Reserved on 24.07.2024)
CORAM :
THE HONOURABLE MR.JUSTICE R.SUBRAMANIAN
and
THE HONOURABLE MR.JUSTICE R.SAKTHIVEL
A.S.No.189 of 2024
and
CMP.No.6990 of 2024
R.Venkatesan @ Venkatesh ... Appellant
vs.
Jitesh Kumar Jain ... Respondent
Prayer : Appeal filed under Section 96 of the Civil Procedure Code,
against the judgment and decree dated 28.08.2023 in O.S.No.109 of 2021 on
the file of the VI Additional City Civil Court, Chennai.
For Appellant : Mr.C.R.Prasanan
For Respondent : Mr.C.P.Sivamohan
JUDGMENT
(Judgment of the Court was made by R.SUBRAMANIAN, J.)
With the consent of the counsel on either side, the appeal itself is
taken up for final disposal since the records of the trial Court has been received.
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2. Challenge in this appeal is to the decree for payment of money
granted by the trial Court in O.S.No.109 of 2021 in favour of the respondent
herein. The respondent/plaintiff sued for recovery of a sum of Rs.34,40,000/-
allegedly due under a promissory note dated 25.12.2017 with interest at 12%
per annum on the sum of Rs.20,00,000/- from the date of plaint till date of
realisation.
3. The substance of the averments in the plaint is as follows:
The defendant and his brother Mr.R.Govindaraj had moved the plaintiff's
father Manohar Jain who was a money lender. On the recommendation of the
said Govindaraj and upon request by the defendant, the plaintiff's father
advanced a sum of Rs.5,00,000/- to the defendant during October 2013. As a
security for repayment of the said sum of Rs.5,00,000/- with interest at 24% per
annum, the defendant had executed a simple mortgage in favour of the father of
the plaintiff on 18.10.2013 and the same was registered as Document No.4107
of 2013 in the office of the Sub Registrar, Anna Nagar. The original title deeds
relating to the property that was mortgaged, were also deposited with the
plaintiff's father. Though the defendant had agreed to repay the monies
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borrowed within three years, he did not repay as assured and he was buying
time on some pretext or the other. While so, in or about October 2015, the
defendant informed the plaintiff that he requires a sum of Rs.20,00,000/- over a
period of two years for development of his business. Despite reluctance, the
plaintiff and his father were lured by the defendant to advance monies to him
on the pretext that the original sum of Rs.5,00,000/- advanced on the strength
of the mortgage in the year 2013 will also be repaid along with interest only if
he is able to plough in more money into his business. After informing the
defendant's brother regarding the transaction, the plaintiff paid a sum of
Rs.20,00,000/- over a period of two years. The defendant executed a temporary
receipt for Rs.5,00,000/- on 25.12.2017. After payment of the entire amount of
Rs.20,00,000/-, the defendant offered to execute a second mortgage in respect
of the property that was covered by the simple mortgage dated 18.10.2013.
However, the plaintiff insisted upon some other property security. The
defendant came forward with the suggestion to deposit the original title deeds
of the property belonging to his brother situate at Kanchipuram as security for
repayment of the entire loan. The plaintiff, believing the defendant's assurance,
obtained a promissory note on 25.12.2017, wherein, the defendant promised to
repay the sum of Rs.20,00,000/- with interest at 24% per annum. It is also
claimed that the original sale deed dated 28.08.2006 relating to the property
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situate at Kancheepuram was also deposited as security. To his dismay, the
defendant neither repaid the loan covered by the mortgage deed nor the loan
covered by the promissory note. During October 2020, the defendant met the
plaintiff and pleaded sometime in view of the outbreak of the pandemic. The
plaintiff agreed to wait subject to the defendant making a token payment of not
less than Rs.5,000/- and endorsing the same on the promissory note. According
to the plaintiff, the defendant who agreed to pay an amount not less than
Rs.5,000/-, did not come back with the payment. As things stood thus, the
defendant issued a legal notice on 21.10.2020 requiring the plaintiff to accept
the principal amount due under the mortgage and with interest from November
2016 and also seeking return of the sale deeds. Surprisingly, the said notice
also claimed that the plaintiff and defendant's brother Govindaraj had colluded
together and created documents. The plaintiff sent a reply on 11.11.2020. A
copy of the same was also marked to R.Govindaraj, the brother of the
defendant. In the above circumstances, the plaintiff had lodged the suit for
recovery of a sum of Rs.20,00,000/- due under the promissory note. As regards
the debt secured by the mortgage, the plaintiff reserved his right to proceed
independently under Section 69 of the Transfer of Property Act, 1882, since the
mortgage deed authorised him to proceed under Section 69.
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4. The defendant resisted the suit contending that he had no necessity
to borrow any money since he has been a Cab driver and he meets out the
family expenses from the income derived from the said job. It is the
defendant's brother Govindaraj who was carrying on construction business and
was a good friend of the plaintiff and his father, had colluded with the plaintiff
to mulct an enormous liability on the defendant. The defendant admitted the
borrowing of Rs.5,00,000/- under the mortgage. He would claim that the
plaintiff extracted several documents from him including blank promissory
notes and other stamp papers. The claim that the documents in respect of the
Kancheepuram property were handed over by the defendant was stoutly denied.
It was also claimed that the suit promissory note is not supported by
consideration. The defendant also relied on the fact that he had issued the
notice even prior to the filing of the suit on 21.10.2020 denying execution of
the promissory note. The defendant also claimed that the entire transaction is a
make believe affair stage-managed by the plaintiff and the defendant's brother
Govindaraj to grab his property. The alleged meeting on 15.10.2020 or any
other date was disputed.
5. On the above pleadings, the learned trial Judge framed the
following issues:
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1. Whether the defendant has borrowed Rs.20,00,000/- from
the plaintiff?
2. Whether the defendant has executed two promissory notes,
one dated 23.10.2015 which was cancelled and demand promissory
note for Rs.20,00,000/- dated 25.12.2017 for valid consideration?
3. Whether the plaintiff is entitled for interest at the rate of
24% per annum on the principal amount from 25.12.2017?
4. Whether the plaintiff is entitled for decree as claimed in the
suit?
5. Whether else reliefs the parties are entitled to?
6. At trial, on behalf of the plaintiff, he was examined as PW1 and
one Prabakar was examined as PW2. Exs.A1 to A7 were marked. On the side
of the defendant, the defendant was examined as DW1 and no other document
was marked. On a consideration of the evidence on record, the learned trial
Judge concluded that the promissory note Ex.A4 is supported by consideration
and hence, the defendant is liable to the suit claim. The trial Court heavily
relied upon the fact that the defendant admitted his signatures in the suit
promissory note in view of the presumption under Section 118 of the
Negotiable Instruments Act, 1881. The trial Court faulted the defendant for not
letting in any other evidence except his oral evidence. On the above
conclusions, the learned trial Judge decreed the suit. Aggrieved, the defendant
is on appeal.
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7. We have heard Mr.C.R.Prasanan, learned counsel appearing for the
appellant and Mr.C.P.Sivamohan, learned counsel appearing for the respondent.
8. Mr.C.R.Prasanan, learned counsel appearing for the appellant
would vehemently contend that the trial Court erred in relying upon the
presumption enacted in Section 118 of the Negotiable Instruments Act, 1881.
The learned counsel would vehemently contend that once it is claimed by the
defendant that the suit promissory note was signed in blank and the same was
not supported by consideration and a probable case is made out by the
defendant which would have the effect of improbabilising the plaintiff's claim,
the Court cannot mechanically rely upon the presumption created by Section
118 to grant a decree. In order to buttress his submission, the learned counsel
would rely heavily upon the evidence in cross examination of PW1. Drawing
our attention to various answers in the cross examination of PW1, the learned
counsel would submit that the presumption raised under Section 118 of the
Negotiable Instruments Act, 1881, stood rebutted.
9. The first contention of the learned counsel on the evidence is that
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the plaintiff who was aged only 23 years at the time of lending, did not have the
wherewithal to lend such huge amount of Rs.20,00,000/-. Drawing our
attention to the claim of the plaintiff that the amount was paid on different dates
between October 2015 and December 2017 would by itself show that the claim
of the plaintiff is artificial. He would also draw our attention to the evidence
that the plaintiff had admitted that he is an income-tax assessee, but he has
chosen to add that he does not remember as to when he became an assessee.
This, according to the learned counsel, is only to explain the failure to produce
the income tax returns to demonstrate the borrowing. The learned counsel
would also point out that a money lender like the plaintiff who charges
exorbitant interest of 24%, would never lend money for over a period of two
years without any security whatsoever. The learned counsel would also draw
our attention to the claim of the plaintiff that he is not maintaining any
statement of accounts and the answer 'No' given by the plaintiff to a suggestion
whether he has disclosed all the payments made to the defendant in his income
tax returns. These answers, according to the learned counsel, would
demonstrate without any further proof that the promissory note is not supported
by consideration.
10. Further reliance is also placed by the learned counsel on the cross
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examination of PW1, where, he admits that he was just 21 years old in 2015
when he claims that the actual lending started and that he has not filed any
document to show part payments were made prior to 25.12.2017 namely, the
date of execution of the promissory note. The following questions and answers
is heavily relied upon by the learned counsel to contend that the entire claim is
fictitious:
''Ques : I put it to you that you have not filed any document to
show that you have made payment to the defendant on 25.12.2017?
Ans : I have not filed document to show that on 25.12.2017
what amount I have paid to the defendant. But on 25.12.2017 the
defendant had executed Ex.A4 promissory note.
Ques : I put it to you that you did not have such a source and
means to pay such a huge amount of Rs.20 Lakhs to the defendant?
Ans : I deny the suggestion. Even during my student life, I was
doing small business and also avail financial help from my parents
and grand parents, friends and thereby I had a source.''
11. The learned counsel for the appellant would also draw our
attention to the evidence of PW2, the alleged Attestor of the promissory note
dated 25.12.2017 just to demonstrate that his evidence runs counter to the
evidence of PW1 and that it is artificial. While the plaintiff in his evidence
would claim that monies were paid for over a period of 2 years from October
2015 to December 2017 and the suit promissory note was executed on
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25.12.2017, PW2 would claim that the defendant received more than
Rs.10,00,000/- on 25.12.2017 at the time of execution of the document.
Pointing out to the above contradiction, the learned counsel would submit that
the evidence of PW2 cannot be safely relied upon as proof of execution of the
instrument. The learned counsel would also invite our attention to a judgment
of the Hon'ble Supreme Court in Bharat Barrel & Drum Manufacturing
Company vs. Amin Chand Payrelal reported in (1999) 3 SCC 35, wherein,
the Hon'ble Supreme Court has held that the rebuttal of the presumption under
Section 118 can be done by direct evidence or by preponderance of
probabilities showing existence of consideration was improbable, doubtful or
illegal. He would also invite our attention to the judgment of a Division Bench
of this Court to which one of us (R.SUBRAMANIAN, J.) was a party in
T.Mohan Kumar vs. R.Asok Kumar reported in 2024 (1) MWN (Civil) 734,
where, it was held that if the plaintiff fails to prove that he was in possession of
funds on the date of the alleged advance, the presumption under Section 118
stood rebutted.
12. Contending contra, Mr.C.P.Sivamohan, learned counsel appearing
for the respondent would submit that once the execution of the promissory note
is admitted, then, it is for the defendant to show absence of consideration. In
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the absence of any other evidence except his interested testimony, the defendant
had failed to discharge the initial burden in order to shift the onus on the
plaintiff to prove consideration. The learned counsel would contend that the
discrepancies that have been pointed out by the learned counsel for the
appellant cannot in any manner belittle or efface the presumption under Section
118 of the Negotiable Instruments Act, 1881. The fact that the defendant had
borrowed from the father of the plaintiff by executing a mortgage deed, was
also pressed into service to buttress the contention of the learned counsel.
13. We have considered the rival submissions.
14. On the arguments of the counsel for the parties, the following
point arises for determination:
Whether the trial Court was justified in invoking the presumption
without adverting to the conflicts and contradictions in the evidence of PW1
and PW2 as well as between the proof affidavits filed in chief examination and
the cross examination of the plaintiff as PW1.
On the Point
No doubt, Section 118 of the Negotiable Instruments Act, 1881, enacts
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the presumption as to consideration once the execution of the promissory note
is admitted, but the said presumption is rebuttable. How the said presumption
could be rebutted is laid down by the Hon'ble Supreme Court in Bharat Barrel
& Drum Manufacturing Company's case referred to supra. The Hon'ble
Supreme Court while dealing with the said question, had observed as follows:
''12. Upon consideration of various judgments as noted herein
above, the position of law which emerges is that once execution of
the promissory note is admitted, the presumption under Section
118(a) would arise that it is supported by consideration. Such a
presumption is rebuttable. The defendant can prove the non-existence
of consideration by raising a probable defence. If the defendant is
proved to have discharged the initial onus of proof showing that the
existence of consideration was improbable or doubtful or the same
was illegal, the onus would shift to the plaintiff who will be obliged
to prove it as a matter of fact and upon its failure to prove would dis-
entitle him to the grant of relief on the basis of the negotiable
instrument. The burden upon the defendant of proving the non-
existence of the consideration can be either direct or by bringing on
record the preponderance of probabilities by reference to the
circumstances upon which he relies. In such an event the plaintiff is
entitled under law to rely upon all the evidence led in the case
including that of the plaintiff as well. In case, where the defendant
fails to discharge the initial onus of proof by showing the non-
existence of the consideration, the plaintiff would invariably be held
entitled to the benefit of presumption arising under Section 118(a) in
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his favour. The court may not insist upon the defendant to disprove
the existence of consideration by leading direct evidence as existence
of negative evidence is neither possible nor contemplated and even if
led is to be seen with a doubt. The bare denial of the passing of the
consideration apparently does not appear to be any defence.
Something which is probable has to be brought on record for getting
the benefit of shifting the onus of proving to the plaintiff. To disprove
the presumption the defendant has to bring on record such facts and
circumstances, upon consideration of which the court may either
believe that the consideration did not exist or its non-existence was
so probable that a prudent man would, under the circumstances of the
case, shall act upon the plea that it did not exist. We find ourselves in
the close proximity of the view expressed by the Full Benches of the
Rajasthan High Court and Andhra Pradesh High Court in this regard.''
15. In T.Mohan Kumar's case referred to supra, this Court after
referring to the judgments in Bharat Barrel & Drum Manufacturing
Company's case (supra) and Hiralal vs. Badkulal reported in AIR 1953 SC
225, wherein, the Supreme Court had held that the defendant may also rely
upon circumstantial evidence and if the circumstances so relied upon are
compelling, the burden may likewise shift again to the plaintiff, had held that
direct evidence of absence of consideration is not the only mode of proving
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absence of consideration. Surrounding circumstances and probabilities can also
be relied upon by the Court to non suit the plaintiff on the ground of absence of
consideration.
16. If we are to examine the evidence on record in the light of the
above observations of the Hon'ble Supreme Court, we find the following
features:
(i) The plaintiff had claimed that his father had lent a sum of
Rs.5,00,000/- to the defendant in 2013 and the defendant has neither repaid the
interest nor the principal.
(ii) The plaintiff would state that though he was reluctant to advance
further sum to the defendant, he had agreed to do so on the recommendation of
the defendant's brother sans any security.
(iii) The plaintiff who was aged about 23 years at the time of the lending
and claimed that his father was a money lender, had chosen to advance monies
without even obtaining any acknowledgment of borrowing from the defendant.
(iv) The plaintiff though claims that he was an income-tax assessee, he
has not produced his income-tax returns and he has answered in the negative to
a suggestion that he has shown this lending in his income-tax returns.
(v) The plaintiff has not chosen to produce even a scrap of paper to show
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that he was possessed of funds during the relevant period for having lent the
money.
(vi) The evidence of PW1 and PW2 are contradicting on the manner in
which the money was lent. While PW2 would claim that the plaintiff paid at
least Rs.10,00,000/- on 25.12.2017, the date of execution of the promissory
note, PW1 would claim that on 25.12.2017, the defendant executed the
promissory note acknowledging the receipt of the money earlier.
17. These features definitely would shake or at least weaken the
presumption under Section 118. We find that the defendant had probabilised
his defence by way of cross examination and the answers given by PW1 in the
cross examination by themselves would have the effect of rebutting the
presumption under Section 118. Once that is done, it will be incumbent upon
the plaintiff to place some evidence which would improbabilise the case of the
defendant. We find that the plaintiff has miserably failed in establishing or
placing such evidence before the Court. As we had already pointed out, the
Hon'ble Supreme Court has held that it will be open to the defendant in the suit
on a promissory note to improbabilise the case of the plaintiff by establishing
circumstances which would have the effect of weakening the presumption
under Section 118. The learned trial Judge had gone by the statutory
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presumption without adverting to the evidence on record to decree the suit.
18. A holistic reading of the evidence of PW1 and PW2 impels us to
believe the version of the defendant. Once we find that the version in defence
is more probable, we will have to necessarily look for something more than the
mere oral evidence of PW1 to establish the passing of consideration.
Unfortunately for the plaintiff, the evidence of PW2 is also not very helpful.
His evidence contradicts the evidence of the plaintiff. Therefore, if we are to
take the entire evidence together, it is clear that the plaintiff has not established
passing of consideration and the presumption under Section 118 stood rebutted
by the prevailing circumstances. We are, therefore, unable to sustain the
findings of the trial Court which do not reflect the impact of the evidence on
record.
19. In view of the above conclusion of us, the Appeal Suit stands
allowed with costs and the suit in O.S.No.109 of 2021 stands dismissed. No
costs. Consequently, connected miscellaneous petition is closed.
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(R.S.M, J.) (R.S.V, J.)
27.09.2024
Index : Yes
Neutral Citation : Yes
bala
To
The Judge,
VI Additional City Civil Court,
Chennai.
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R.SUBRAMANIAN, J.
and
R.SAKTHIVEL, J.
bala
PRE-DELIVERY JUDGMENT
MADE IN
DATED : 27.09.2024
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